Former UK government minister Peter Mandelson is to step down from the House of Lords amid allegations that he passed market-sensitive information to paedophile financier Jeffrey Epstein.
British Prime Minister Keir Starmer had threatened legislation within weeks to strip the former Northern Ireland secretary of his title.
Police in London confirmed that a criminal investigation is under way.
The UK Cabinet Office passed material to police after an initial review of documents released as part of the Epstein files found they contained "likely market-sensitive information" and official handling safeguards had been "compromised".
The files, released by the US Department of Justice, apparently showed that Mr Mandelson - as business secretary - gave material to Epstein while the government dealt with the 2008 financial crash and its aftermath.
Metropolitan Police Commander Ella Marriott said: "Following the further release of millions of court documents in relation to Jeffrey Epstein by the United States Department of Justice, the met received a number of reports into alleged misconduct in public office including a referral from the UK government.
"I can confirm that the Metropolitan Police has now launched an investigation into a 72-year-old man, a former government minister, for misconduct in public office offences.
"The Met will continue to assess all relevant information brought to our attention as part of this investigation and won't be commenting any further at this time."
A British government spokesperson said the administration "stands ready to provide whatever support and assistance the police need".
House of Lords speaker Michael Forsyth confirmed that Mr Mandelson would formally retire from the upper tomorrow.
"Given the public interest and for the convenience of the house, I've decided to inform the house that the clerk of the parliaments has today received notification from Lord Mandelson of his intention to retire from the House, effective from February 4th.
"I will formally notify this to the house tomorrow in the usual way," Mr Forsyth said.
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British Prime Minister Keir Starmer said that Mr Mandelson had "let his country down".
A spokesman for Mr Starmer said that he opened a cabinet meeting by saying he was "appalled by the information that had emerged over the weekend in the Epstein files".
"He said the alleged passing-on of emails of highly sensitive government business was disgraceful, adding that he was not reassured that the totality of information had yet emerged.
"The prime minister told cabinet that Peter Mandelson should no longer be a member of the House of Lords or use the title, and said he had asked the Cabinet Secretary (Chris Wormald) to review all available information regarding Mandelson's contact with Jeffrey Epstein during his time serving as a government minister.
"He said he’d made it clear the government would cooperate with the police in any inquiries they carried out, but he said the government had to press and go further, working at speed in the (House of ) Lords, including legislatively if necessary.
"He reiterated that there was a need to move at pace," the spokesman added.
Watch: Britain's Prince Edward says it's 'always important to remember victims' of Epstein
Prince Edward - a brother of Andrew Mountbatten-Windsor - has said it is important to "remember the victims" in the first words spoken by a member of the British royal family since millions of further documents relating to Epstein were released.
The former prince features a number of times in the files, including images apparently showing him crouching over an unidentified woman in what appears to be Epstein's New York mansion.
Responding to a question about how he was coping by a journalist during the World Government's Summit in Dubai, Prince Edward said: "Well, with the best will in the world, I'm not sure this is the audience that is the least bit interested in that.
"They all came here to listen to education, solving the future, but no, I think it’s all really important, always, to remember the victims and who are the victims in all this."
Andrew and his ex-wife, Sarah Ferguson, appear in a number of email exchanges with Epstein.
In one, the former prince appears to invite him to Buckingham Palace, and Sarah apparently says: "I am at your service. Just marry me".
Epstein also appears to introduce Andrew to a woman described by the paedophile as "26, Russian, clevere (sic) beautiful, trustworthy", while in the same month, Andrew also apparently tells Epstein: "Wish I was still a pet in your family".
The former duke vehemently denies any wrongdoing.
In 2022, he paid millions of euro to his main accuser, Virginia Giuffre, a woman he claims never to have met.
He was stripped of his titles by King Charles last year after the posthumous publication of a book from Ms Giuffre, who alleged she was trafficked by Epstein and his former girlfriend Ghislaine Maxwell when she was 17.
Lawyers representing a second accuser have urged King Charles to contact them following allegations that their client was sent to the UK for a sexual encounter with Andrew.
Brad Edwards, from the US firm Edwards Henderson, previously told the BBC that his client had spent the night with Andrew after being given a tour of Buckingham Palace.
